HSBC Jintrust Fund Management has launched an on-shore RMB money market fund in China, raising RMB1.16 billion, or US$178 million, in its initial public offering, ended Oct. 28.
HSBC said this is the second triple-A rated money market fund in China. The fund will invest in a wide array of debt instruments in the local market.
“Given that the RMB is a highly regulated currency, a large amount of RMB assets held by multinational corporations in China are increasingly looking for better investment alternatives,” said Steve Lee, chief executive officer of HSBC Jintrust Fund Management Company. “With an expectation of currency appreciation and a growing need to retain surpluses onshore for business activities, we believe money market funds are a viable choice, offering diversification of counterparty risk, high liquidity and competitive yields at a relatively low cost.”
Jacklin Zhong, portfolio manager of the HSBC Jintrust RMB Money Market Fund, added: “We think money market funds will continue to benefit from government policy, which supports a high interest rate environment. Our fund aims to achieve an AAA-rating with a rate of return comparable to the RMB seven-day call deposit rate and daily access. Money market funds currently account for 5%, or RMB118 billion, of the fund industry in China, and we expect to see continued growth in this asset class in China.”